Co-op aims to bounce into the supermarket big league with £1.6bn takeover of Somerfield

The days when there was a Co-op shop on almost every street corner have faded into memory.

But now the the group - once Britain's biggest grocery retailer - aims to bounce back into the big league with a £1.6billion takeover of Somerfield.

The Co-operative Group is on the brink of signing a deal which could boost the number of its stores by 40 per cent.

Co-op: The group is on the brink of signing a big deal to buy Somerfield

Sources close to both companies say terms have been agreed after months of talks and an announcement is imminent.

Insiders have called the deal 'rocket fuel' in the transformation of the fortunes of the Co-op, which has struggled against rival supermarkets in the past decade.

It is hoped the takeover of Somerfield - Britain's fifth-largest chain - will revive an institution which once had 30,000 stores and 13million customer-members.

Somerfield's 900 stores will take the Co-op's portfolio to more than 3,100 supermarkets and convenience stores, closing the gap on Morrisons, the fourth biggest chain.

Last month, Peter Marks, chief executive of the Co-op laid out his vision to become Britain's premier retail brand.

He said: 'Manchester is the home of Britain's premier football team, so in five years' time I'd like it to be home of Britain's premier retail brand. That's where we are heading and I think we have the capacity and ambition to achieve it.'

If it is approved by competition watchdogs, the deal will give the group, owned by its members, annual sales of more than £10billion and a market share of 7.7 per cent.

Somerfield was bought in 2005 for £1.1 billion by the Apax-led consortium, but its hope of selling at £2.5 billion were dashed by the credit crunch.

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Co-op aims to bounce into the supermarket big league with £1.6bn takeover of Somerfield